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Family Offices (Development (Family offices as they are known today took…
Family Offices
Development
Family offices as they are known today took off in the 19th C with the Rockefeller family still remains today
Family offices started gaining popularity in the 1980s, and since 2005, as the ranks of the super-rich grew to record proportions family offices swelled proportionately
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3,000 - 5,000 in the US, 10,000 world wide
but the central goals usually include ensuring effective wealth management, superior investment results, and a smooth transfer of assets between generations.
Arguably the fastest growing investment vehicle worldwide. This growth is evidence of the advantages of a family office in managing, protecting and distributing wealth within families with large fortunes
Family offices began evolving in the 19th century, with examples such as the house of Morgan, established in 1838 by the family of financier and art collector J.P. Morgan
Benefits
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An integrated plan for your family’s complete financial affairs, including investments, wealth transfer strategies, proactive tax planning and optimal ownership structures.
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A comprehensive approach to risk management, so you know your family and wealth are protected.
Coordination of your professional advisors – including lawyers, accountants, investment and insurance advisors – to ensure that your family’s objectives are met and nothing falls through the cracks.
The proactive, personalised and highly responsive service of an independently-owned, boutique firm - business serving a sophisticated or specialised clientele
Types of Services
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Other, secondary service providers include: art advisors, personal protection advisors, interior designers, medical team, fight & yacht management
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Purpose
Manage the affairs of wealthy families and preserve their wealth and effectively transfer established wealth across generations
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Research suggests that c. 70% of wealth is lost by second generation and 90% lost by the third generation
Drawbacks
Dispute and conflict - Conflict may arise between the families, and this can prove difficult to manage, particularly if one family is more dominant
Privacy: typically an advantage, however, there is one instance where it can be problematic. All information is centralised meaning a leak of information though much less likely could potentially involve more information.
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Cost of Establishing: With any investment vehicle, there are upfront costs that can be prohibitive. Furthermore, there is the teething period at the beginning that can cause unforeseen problems. Due to these issues, it can take a considerable amount of time to see benefits from a family office.
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Benefits
Transparency: management of complex issues with wealth can be handled in a way that is appropriate to the family and provides better access to the information for all family members. This transparency, can create openness, and help to avoid future misunderstandings and disputes within the family.
Confidentiality and Privacy: A dedicated office improves security and privacy. Access to information, wealth management, and advisory services is controlled and central. Meaning there is less concern that outside companies and staff will view family data.
Alignment of goals: Without family offices - family members may be moving in different directions. Each family member may have an independent advisor and working towards conflicting goals. With a family office, the same advisors can work to synchronise the direction for all family members.
Types
Single Family Office
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Hard to determine exactly HOW many SFO as they are typically kept quite - confidentiality and security/secrecy
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Definition
An organisation dedicated to serving wealthy individuals and/or families on a diverse range of financial, estate, tax, accounting and personal family needs